September 24, 2007

Three companies, three widget-enabled business models

One of the interesting aspects of last week’s SIIA luncheon panel on widgets (see previous post) was the way the presenting companies each took a different approach to widget applications and monetization strategies. This probably owes something to the selection process for the panel, but it also reflects the variety of “widget strategies” available, and the breadth of their potential impact.
Sphere, a San Francisco-based start-up, struck me as the least “widget-centric” of the three. Perhaps not coincidentally, it also claimed the most impressive and relevant customer base to the audience of business and professional publishers (e.g. wsj.com, nytimes.com, washingtonpost.com and cnn.com, as well as TechCrunch, GigaOm, and some 40,000 other blogs). Like a number of other players, its underlying technology crawls and searches publishers’ own resources and selected blogs in order to provide “more like this” links to related content from the blogosphere. On top of this is a rich media widget that can be centrally-served and –tracked. But unlike most widget applications, which are designed for easy “grabbing” and viral distribution, Sphere’s Related Content Widget is intended to nestle with the web content from which they derive matches and recommendations. Sphere makes money from a combination of publisher license fees and revenue sharing on incremental sold inventory of impressions and contextual advertising links, and on advertising contained within the widget itself.

Adaptive Blue takes a different approach: using widget technology (including a browser plug-in) to enable users to use and modify on-the-fly lists of related links. For example, right-clicking on a “smart-link” icon next to a book title might yield a widget with links to various sources from which the book can be purchased, related titles, books by the same author, etc.. (The company has focused to date mainly on topics like books, movies, sports, entertainment, and investment, though B2B applications are also now being explored.) Users can modify the lists, create their own, or the application can make changes based on observing the user’s browsing behavior. Publishers can also created and distribute widgets containing branded lists (e.g. top ten lists, sales charts, etc.). The business model here appears to be primarily based on affiliate sales programs, but there is clear potential to for publishers to use branded lists virally to drive traffic to destination sites.

Of the three panelists’ companies, Clearspring Technologies seems to be the likeliest to make a broad impact on the publishing industry. It is by far the market leader in “widget applications developed and syndicated,” at least in terms of the raw numbers – over 11 billion now populating the Web. Clearspring is more of a pure infrastructure provider – think DoubleClick for widgets – that helps publishers “widgetize” content in a wrapper that can be customized by users, and then provides the means to track the widget’s voyage on the net, including domains where it is embedded, impressions it receives, redistribution paths, and specific interactions with users (e.g. mouse-overs). Publishers can use widgets to drive traffic back to a destination site, or to monetize traffic within the widget itself. And they can “blacklist” certain domains (e.g. adult sites) where the widget and its advertising won’t be embeddable. Clearspring can also serve widget advertisements to a qualified audience – as Google is beginning to do as an option for contextual advertising partners.